Commission quick fix plan for carbon market must lead to real emissions reductions

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Press release - July 25, 2012

Brussels – Greenpeace and WWF cautiously welcomed a plan by the European Commission today to prop up the EU’s ailing carbon market. The plan aims to temporarily reduce the amount of carbon emission allowances that can be traded on the market by delaying their auctioning (a process known as backloading).

The European Commission rightly recognises that the EU's Emissions Trading Scheme (ETS) has been suffering from a surplus of allowances which have driven down the price of carbon and reduced the scheme's ability to encourage polluting companies to cut greenhouse gases. But Greenpeace and WWF expressed disappointment that the Commission has not yet suggested structural measures to reform the carbon market, such as permanently removing allowances or increasing the EU's emission reduction target.

Greenpeace EU climate policy director Joris den Blanken said: "The euro crisis is showing Europe the cost of doing too little too late. The EU should not repeat the same mistakes with the carbon market. We need swift and decisive action or the scheme will deteriorate fast and will not deliver any real reduction in carbon emissions for at least a decade. The number of allowances needs to come right down or companies might as well be trading Monopoly money."

WWF EU climate policy officer Sam Van den plas said: "The lack of ideas coming out of the Commission for real emission reductions is a big disappointment. Further reforms are needed to make the European carbon market work for the climate in a positive way. We all know that the EU Emission Trading Scheme is in a state of crisis and only structural measures can save it from collapse."

After approval of the Commission's plan by the European Parliament and EU governments, the Commission will release a detailed proposal specifying the timing and exact amount of allowances that should be withheld from the carbon market.

A recent report by the German-based Öko-Institut shows that a surplus of emission allowances could undermine the effectiveness of the ETS until 2024 and that mere 'backloading' of allowances is not enough to repair the scheme. For the ETS to deliver fully, the EU must increase its commitment to cut carbon emissions to at least 30 percent by 2020, said Greenpeace and WWF.